Stocks’ Details

4DS Memory Limited

Second Non-Platform Lot Wafers Due for Shipment: 4DS Memory Limited (ASX: 4DS) is engaged in the development of semi-conductors, interface switching ReRAM using non-volatile technology for next-generation storage in mobile and cloud. It has a portfolio of 29 US patents and 3 patent applications in the pipeline. As on 12^th January 2021, the market capitalisation of the company stood at ~$190.93 million. In a recent update on wafer production and its analysis, 4DS has informed investors of the completion of manufacturing of the second non-platform lot wafers by imec. Based on the process refinements discussed with imec, it was planned to commence fabrication of Second Platform Lot wafers by mid Q1FY21. 4DS will then analyse reports and decide with its partners to develop wafers with all requisite control and function completely as a megabit memory. 4DS has also updated investors of the recent restrictions in the Silicon Valley due to the rise in the pandemic cases. It will monitor the situation closely and update the market of any adverse impact on the company.

September 2020 Update: During September 2020, 4DS raised $3.1 million via SPP to sponsor its FY21 objectives. It received 3 more patents in the quarter and submitted applications for 6 more patents for its Interface Switching ReRAM for Storage Class Memory in the US. The company updated on the start of the production of 23 non-platform wafers (II lot) and 1 lot of 12 platform wafers (II lot). At the end of September 2020 quarter, 4DS had a cash balance of $7.85 million.

Operating Cash Flow (Source: Company Reports)

Grant of 29^th Patent: On 9^th December 2020, 4DS announced the grant of another USA patent-Resistive Memory Device Having A Template Layer. The grant of this new patent widens company’s previous claims in interface switching ReRAM.

Outlook: 4DS and imec continue to work together to develop the megabit chip and working on a collaboration extension subject to new terms agreed upon for FY21. It remains committed to fabricating a 4DS Interface Switching megabit chip with storage class memory features and/or finalise a corporate transaction in 2021.

Stock Recommendation: The stock of 4DS gave a positive return of 150% in the past three months and a positive return of 277.77% in the past six months. The stock is trading close to its 52-weeks’ high level of $0.175. The stock of 4DS has a support level of ~$0.162 and a resistance level of ~$0.175. Considering the high trading levels, the track record of incurring losses during FY15 to FY20, and negative ROE, we give an ‘Avoid’ rating on the stock at the current market price of $0.170, up by 17.241% on 12^th January 2021.

BluGlass Limited

Change of Directors’ Interest Notice: BluGlass Limited (ASX: BLG) is engaged in the development of high-value semiconductor devices – laser diodes (LD), next-gen LEDs and microLEDs using remote plasma chemical vapour deposition (RPCVD). BLG owns close to 75 international patents. As on 12^th January 2021, the market capitalisation of the company stood at ~$62.86 million. Recently, one of the company’s Directors’, Vivek Rao, who holds an indirect interest in the company, acquired 444,850 ordinary shares and 1 million performance rights of the company at $0.02 per share.

September 2020 Quarter Results: The company recently confirmed that it is on track to deliver commercial product and revenues from CY2021. It has developed a range of laser products to meet the industry needs of gallium nitride, and initial revenues are expected from early CY21. The company earned customer foundry revenue of $33.3k, incurred a direct expenditure of $1.56 million and had a cash balance of $3.6 million during September 2020 quarter. It received a tax rebate of $2.7 million after the close of the quarter. During the quarter, BLG entered an agreement with Defense Advanced Research Projects Agency, US for a paid R&D program. BluGlass has developed BLG-500, its commercial scale manufacturing platform which is now ready for product development and contributing to LD and cascade LED commercialisation plans.

Operating Cash Flow (Source: Company Reports)

Outlook: The company has identified an addressable market of $658 million in the USA for LD. It aims to target 6-10% serviceable share of the total market size in the US by 2025. 4DS anticipates to roll-out sample products of its laser diode design to its customers for testing in early 2021.

Stock Recommendation: The stock of BLG gave a positive return of 8.86% in the past three months and a positive return of 109.75% in the past six months. The stock is trading above the average 52-weeks’ price level band. The stock of BLG has a support level of ~$0.070 and a resistance level of ~$0.107. The stock of BLG is trading at an EV to Sales multiple of 15.7x as compared to an industry median of 14.9x, thus seems overvalued. Considering the stock’s decent returns in the past few months, current trading levels, and TTM Valuation, we are of the view that most of the positive factors have already been factored at the current levels. Hence, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $0.86, down by 1.150% on 12^th January 2021.

K2 Energy Limited

Q1FY21 Activities and Financial Highlights: K2 Energy Limited (ASX: KTE) is engaged in oil and gas drilling activities in the USA. As on 12^th January 2021, the market capitalisation of the company stood at ~$15.93 million. During Q1FY21, the company undertook drilling at 2 sites (oil wells) in Alabama during FY20. Based on the results, none of the 2 sites hold commercial potential currently. However, the second site (well) at Conecuh county will be drilled further and the company continues to scout for more drilling prospects. Through a significant interest in the NASDAQ listed Atomera, Inc, K2 is involved in different projects with semi-conductor companies like Samsung, Texas Instruments, Intel, Toshiba to deploy MST™ technology. In partnership with Atomera, Inc. Solar, K2 is now scouting for a solar firm for a JV to bring Mears Silicon technology to the market. The cash outflows from operations for Q1FY21 stood at $93k, and the balance of cash and cash equivalents was $1.023 million as on 30 September 2020.

Cash Flows from Operating Activities (Source: Company Reports)

Outlook: For its oil and gas business, KTE is looking for further drilling prospects in the US. Though KTE reduced its holding in Aromera to 523,846 shares in FY20, however, it is positive about Atomera gaining traction from semiconductor companies. For Atomera, K2 is looking for a commercialisation partner to produce products integrating its MST technology.

Stock Recommendation: The stock of KTE gave a positive return of 131.81% in the past three months and a positive return of 240% in the past six months. The stock is currently trading close to its 52-weeks’ high level of $0.061. The stock of KTE has a support level of ~$0.048 and a resistance level of ~$0.054. On a TTM basis, the stock of KTE is trading at a price to book value multiple of 2.3x as compared to the industry median (Energy) of 1.9x. Considering the stock’s decent returns in the last six months, current trading level and valuation on TTM basis, we are of the view that most of the positive factors have already been discounted at current trading levels. Hence, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the current market price of $0.051, down by 3.774% on 12^th January 2021.

KTE Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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